“No celebration” as Skytrans shuts up shop

File image of a Skytrans Dash 8 Q300 at Sydney Airport in August 2013.

Cairns-based regional airline Skytrans has voluntarily ceased operations with immediate effect from Friday January 2, just a day after marking its 25th anniversary.

In a statement posted on the airline’s website, managing director Simon Wild said the low Australian dollar made Skytrans’ business case for operations in 2015 unsustainable. The airline, which lost three Queensland government subsidised regional air routes to Regional Express with effect from January 1, had been planning to continue operating on a much reduced scale, having already made 121 staff redundant.

“Since the loss of a large government contract we had been working on a business model that included focused services on the Cape routes utilising three aircraft,” Wild said in the statement. “This included a reduction of operating costs and a workforce restructure. This 2015 business model indicated a small profit and whilst a reduced version of our current business, it was projected to be a viable albeit smaller business.”

However, Wild said that business case was developed based on a USD-AUD exchange rate of 91 cents, whereas the Australian dollar has recently been trading as low as US 81 cents.

“In addition to the currency challenge it now appears likely that we will have competition on our Cape routes with an inevitable price war – a war where the only winner would be the airline with the deepest pockets. It would be a war I would not be prepared to enter as it would have jeopardised staff entitlements. We have been talking with possible investors and have pursued these interests diligently, but unfortunately every road pointed to unsustainability and as such we could and would not entice investors to a business we did not believe ourselves had a strong future.

“While at 2nd January, 2015 we have a healthy bank balance, due to the uncertain future, I have decided to cease trading.”

The airline says it paid $2 million in staff entitlements to 121 staff made redundant in November and early December, and that a final $2 million was paid to remaining staff on Friday, “and again I confirm that all superannuation payments are up-to-date,” Wild said.

“Today there is no celebration, beyond the pride everyone in Skytrans shares in having delivered a safe, reliable passenger and freight service to communities as diverse as Birdsville and Boulia, Bamaga and Brisbane. We will miss them all, for they have all been relationships built over a lifetime of trust and mutual support, collaboration and shared endeavour, and good old fashioned friendships forged easily between good people.”

Congratulations to the Newman government for putting a local Queensland company out of business so it could save a few bucks. No disrespect to Rex, which is a fine regional airline, but some government decisions defl logic.

You have to feel for Skytrans- out of all the “smaller” companies they had a good plan but just could not get that little bit of help from the government. It just shows how it’s almost impossible to make money out of aviation these days

My words will anger some readers but I must share my opinion. In the Australian airline industry we like to rely on government contracts and want everything the cozy way. Why does Skytrans not go into different markets? Why not offer RPT flights from say Bankstown or similar secondary airports where the catchment area is large enough to support an operation? If the business does not come to you, you go where the business is. Saying that a number of government contracts have been cancelled and now we collaps is nothing else than being lazy (or should I use the Australian term for lazy, laid-back). Expecting that the government will be the prime customer was a good business model for a while, these days are over. Aviation in any nation is based on the US$ and fuel prices effect every operator, not just Skytrans.The consumer wants cheaper airfares, so offer them cheaper airfares with your Dash-8. Be creative, conduct mixed (cargo and pax) flights. Fly major routes, not just remote communities. There are many other options, not just government contracts. Give me 3 of your aircraft and its crew, I show you how the business will generate revenues and profit. But only sitting and waiting for honey to be given does not work anymore. I am not saying to take silly risks but Simon, look further than remote QLD, you will see there is plenty of work out there for Skytrans. Last advice, put the operations on hold if you must, do not shut down. If neded wait for better times, they will come.

Some fair comments above from both sides of the arguement. Sad to see Skytrans go, & good to see a business operator who “knows when to hold ’em, knows when to fold ’em.”

Competition is a funny thing. I recently had to travel from SYD to Toowoomba, just for the day. Skytrans operated a direct flight, without any competition (this was before Qantaslink flying to Wellcamp), but barely had one return flight per day. It was cheaper for me to fly Jetstar return to the Gold Coast & hire a car for the day, & fly back that night, than it was to fly Skytrans direct to Toowoomba.

(The fact that my return flight was cancelled due to storms over SYD & I spent the night on the footpath outside the terminal with 50 other travellers because i couldn’t afford a hotel room is irrelevant!)

But REX is by no means the bad guy in Skytrans story either. They seem to be cleaning up fairly well. They moved onto the Newcastle – SYD route just before Aeropelican / Brindabella went pear-shaped as well, & now have that to themselves too.

You have got to be impressed that they have looked forward and although hard, have taken the appropraite steps to protect the employees entitlements. Although sad that this airline has ceased operations, it would be much worse had their super not been up to date and there been no funds for their entitlements. Well done Simon Wild